We have examined the KiwiSaver scheme since mid 2006, and chose to support the Fidelity KiwiSaver  scheme as a credible, comprehensive, secure, and experienced provider, which can be expected to consistently perform over the long term. The selected scheme is well designed, portable and flexible and should meet the majority of Kiwis needs, whether you are an employer, employee, self-employed or an individual, now and into the future.

Fidelity KiwiSaver has seven investment funds, each with a different "risk profile."

• Capital Guaranteed Kiwi Fund1
• Conservative Kiwi Fund
• Balanced Kiwi Fund
• Ethical Kiwi Fund
• Growth Kiwi Fund
• Aggressive Kiwi Fund
• Options Kiwi Fund2

The Fidelity KiwiSaver has several funds which differ from standard funds offered by other KiwiSaver providers. These are described below. 

Capital Guaranteed Kiwi Fund1

For investors who are seeking some degree of stability in the value of their investment, the Capital Guaranteed Kiwi Fund has the benefit of a guarantee from Fidelity Life that the unit price calculated as of 31 March each year will not be lower than the unit price calculated as of 31 March the previous year.

The Ethical Kiwi Fund

The Ethical Kiwi Fund provides investors with the opportunity to avoid certain types of companies and investments. It thus supports investments that embrace the principles of ethical business practices. Currently, the Ethical Kiwi Fund uses its best endeavours to avoid securities issued by organisations earning a substantial share of their earnings from the following industries:

• tobacco
• gambling
• alcohol
• armament production
  

Unlike most ethical investment funds, which focus only on one part of the investment spectrum, the Ethical Kiwi Fund is a diversified fund, with investments in cash, fixed interest and New Zealand, Australian and overseas shares. It is managed for the Fidelity KiwiSaver Scheme by Tyndall Investment Management NZ Ltd, which has been
successfully managing a trans-Tasman equity ethical fund since 2002.

Click here for further information.

Options Kiwi Fund

The Options Kiwi Fund is an alternative investment that invests in cash deposits, bills and other short-term financial
instruments. It is managed for the Fidelity KiwiSaver Scheme by Tyndall Investment Management New Zealand Ltd, which has been managing an identical fund for Fidelity Life for over four years. Much like a property investor can use their own house as security to leverage and buy more houses, the cash invested in the Options Kiwi Fund is used as security by Tyndall to sell option contracts to various major banks. Tyndall earns a premium for selling these options contracts.

These options contracts are based on movements in Government bond rates. Currently most of these are over
a 30-day period on US 10 year bonds, (but they can be for other time periods and in other countries). They provide the
bank counter party with a payout if interest rates move by more than a prescribed margin in that time. If the 10-year government bond rate moves up or down less than the margin, the fund does not have to make any payment on maturity of the option. If the 10-year government bond rate moves more than the margin, the fund must pay out on the contract.
It is very similar to an insurance contract, where the insurer receives premium income but must pay out if a particular
event occurs.

The Option Kiwi Fund's return is then a combination of:
- Interest earned on the short-term cash deposits, plus
- The options premiums paid to the Option Kiwi Fund by the banks (less any payout).

Authorised Governments: New Zealand, Australia, Eurozone, United Kingdom and United States.
Bonds: 7 years to 15 years duration.

The Options Kiwi Fund has a high risk profile and is subject to significant volatility. The Options Kiwi Fund uses leverage and derivatives (options contracts) that could enhance any returns or generate substantial losses. As with all of the Fidelity KiwiSaver Scheme funds, please consider carefully what proportion of your retirement savings should be in the Options Kiwi Fund.

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Below is a summary of each of the seven funds, where it invest, who it suits, the investors timeframe and risk profile. 

Capital Guaranteed Kiwi Fund (see note 2)
Where it invests
A mix of cash, fixed Interest, NZ/Australian & international shares, with at least 40% in cash.
Who it suits
Investors with a shorter-term time frame (2-7 years) and needing capital stability.
Risk profile
Low

Conservative Kiwi Fund
Where it invests
A mix of cash, fixed interest, property and NZ, Australian & international shares, with at least
35% invested in cash and fixed interest.
Who it suits
Investors with a risk-adverse nature, who have a time frame of (5-10 years).
Risk profile
Low

Balanced Kiwi Fund
Where it invests
A balanced mix of cash, fixed interest, property and NZ, Australian & international shares.
Who it suits
Investors with a 5-15 year time frame, looking for a diversified portfolio balancing risk and
return, but willing to have periods of negative return.
Risk profile
Medium

Ethical Kiwi Fund
Where it invests
A mix of cash, fixed interest, NZ, Australian and international shares selected by Tyndall Investment
Management in accordance with their ethical investment guidelines.
Who it suits
Investors with a 5-15 year time frame, wishing to invest in socially responsible investments, looking
for a diversified mix of types of investment, balancing risk and return but willing to have periods of
negative returns.
Risk profile
Medium

Growth Kiwi Fund
Where it invests
A mix of cash, fixed interest, NZ, Australian and international shares with at least 30% of assets
invested in growth investments, particularly international shares.
Who it suits
Investors with a longer time frame (10-45 years) wanting good growth and able to tolerate
a larger risk of negative return periods.
Risk profile
Medium to high

Aggressive Kiwi Fund (see note 3)
Where it invests
International shares, NZ & Australian shares, derivatives, fixed interest and cash.
Who it suits
Investors looking for above-average performance over the long-term and who can tolerate volatility
(significant ups and downs in the value of their investment) associated with investing into such investments.
Risk profile
High

Options Kiwi Fund (see notes 3 & 4)
Where it invests
Short-term fixed interest investments, used as security for derivatives (selling put and call options
contracts)
Who it suits
Investors with a 7-15 time frame who are looking to earn above average returns and are willing to
accept losses that may occur from issuing options on the US and other Government bonds.
Risk profile
High
(see note 4)

NOTES:

1. The actual holdings of each Investment Fund will range around the benchmark ? refer to the table showing the asset allocation ranges under the heading ?What sort of investment is this??

2. For details of the guarantee provided to the Scheme by Fidelity Life in respect of the Unit Price of the units in the Capital Guaranteed Kiwi Fund as at 31 March each year,

3. Both the Options Kiwi Fund and Aggressive Kiwi Fund issue options contracts in a leveraged manner.

4. The Options Kiwi Fund has a high risk profile and is subject to significant volatility. The Options Kiwi Fund
uses leverage and derivatives (options contracts) that could enhance any returns or generate substantial losses. As with all of the Fidelity KiwiSaver Scheme funds, please consider carefully what proportion of your retirement savings should be in the Options Kiwi Fund.

You should select an investment strategy for your investment in the Scheme. Your Investment Strategy will determine how much of each contribution made to each of the funds. If you do not specify any fund(s), you will be invested in the  Conservative Fund.